Valuation for Matrimonial Disputes in India and the USA
Neeraj Agarwal
I Neeraj Agarwal, am a Fellow Member of ICAI, practicing under the banner of M/s AAN & Associates LLP, a firm based out of Banglore Mumbai.
I am also registered under Insolvency and Bankruptcy Board of India as a Registered Valuer for valuation of Security or Financial Assets (Passed in Feb 2020)
I am also holding Bachelor of Commerce (B. Com) degree from Calcutta University (Passed in 2011).
I have corporate working experience in Wipro. After working in Wipro for a short period I started my practice in late 2013 and have been in practice so far for the last 10 years. I have also completed a Certificate Course by ICAI on IND-AS in 2020. I have also cleared Social Auditor Exam conducted by NISM.
I have been inducted as a Special Invitee to the Sustainability Reporting Standard Board, ICAI for the FY 2023-24.
Simran Maurya
Simran Maurya, an MBA student at Ramaiah University of Applied Sciences with a passion for learning and growth. With experience in visual graphics, HR, digital marketing, and now content writing, Simran brings creativity, dedication, and a positive mindset to every project. She thrives both independently and in teams, always eager to improve and support others along the way.
Key aspects of Valuation in India:
Business valuation techniques such as Discounted Cash Flow (DCF), Net Asset Value (NAV), or Market Comparables may be applied if one spouse owns the business.
Valuation of marital disputes in the USA
To ensure equitable asset distribution, valuation in U.S. divorce proceedings adheres to state laws, IRS regulations, and court-approved procedures.
Key aspects of valuation in the USA:
- Evaluation of Businesses: The value of the business becomes significant if one or both spouses own it. Typical techniques include projecting future earnings and discounting them to present value using the income approach (e.g., Discounted Cash Flow or DCF).
- Pensions and Retirement Accounts:
- A QDRO (Qualified Domestic Relations Order) is used to divide 401(k), IRA, and pension plans.
A notable Indian case involving the valuation of a marital dispute:
Reeta v. Ankit Kumar (Allahabad High Court, 5 August 2021)
Ankit Kumar filed a petition for dissolution of marriage under Section 13 of the Hindu Marriage Act in the court of the Principal Judge, Family Court, Bijnor, on 1 November 2017, claiming that the parties were married according to Hindu rituals on 20 February 2011, and no dowry was exchanged. Both partners are Hindus, and the Hindu Marriage Act governs their relationship.
Ankit Kumar claims his wife, Reeta, became aggressive after their marriage, secluded their child, and falsely accused him of dowry harassment. He claims her family assaulted him and abducted her in 2015. According to Reeta, Ankit’s family wanted a dowry of ₹1 lakh plus a car, battered her, and forced her to leave twice. She had filed a First Information Report (FIR) under IPC Section 498A and the Dowry Prohibition Act (DPA), along with a maintenance suit under Section 125 of the Criminal Procedure Code (CrPC).
Key legal challenges in such disputes include dowry allegations, mutual accusations of cruelty, child custody, and maintenance. To resolve property, divorce, and custody disputes, courts must consider evidence presented by all sides.
Argument 1: The plaint alleges only mental cruelty (no physical cruelty) by the wife, which the husband must prove. Citing the wife’s written statement—calling the in-laws “Gunde badmash” (hooligans)—is inadmissible as divorce grounds, since cruelty must be pleaded in the plaint initially. Lawyer-drafted statements can’t substitute original claims.
Argument 2: The petition mentioned cruelty and desertion, but the court incorrectly inferred that those criminal convictions against the husband demonstrated cruelty without evidence. Therefore, the appeal should be allowed, as the respondent failed to substantiate his allegations.
Final Verdict: The Additional Principal Judge, Family Court, Bijnor, issued a judgment dated 30 November 2019, finding that the respondent-plaintiff had proven the accusations in his petition beyond a reasonable doubt and issued a divorce decree. The wife will also receive one-time alimony of Rs. 2,00,000/-.
Litigation Valuation: In India, litigation valuation for matrimonial disputes, such as Reeta v. Ankit Kumar, includes a thorough examination of marital assets under Section 27 of the Hindu Marriage Act, 1955, as well as dowry allegations under the Dowry Prohibition Act and maintenance under Section 125 CrPC.
Courts typically appoint certified valuers to assess real estate, businesses, and movable assets (such as jewelery and vehicles) using methods including market value (for real estate), discounted cash flow (for businesses), and appraisals (for jewelry).
In cases involving claims of concealed assets, forensic accountants may examine financial documents. In contrast to the stricter marital versus separate property distinction in the United States, the valuation takes non-financial contributions (such as homemaking) into account using fair principles.
Courts determine maintenance based on the husband’s income and the wife’s requirements, frequently referring to the level of living during the marriage. While false dowry claims can have an impact on proceedings, they rarely affect asset division unless proven malicious. The burden of proof lies with the claimant, and courts typically prefer documentary evidence over verbal allegations. Unlike the United States, India’s system is more discretionary, with judges examining social and economic considerations to achieve a “just and equitable” division rather than a predetermined formula.
Why is a valuer necessary?
In the case of Reeta v. Ankit, a valuer would objectively estimate the hospital’s worth (using DCF or asset-based methodologies), jewelry (by appraisals), and real estate (using circle rates or comparable sales). Courts rely on these estimates to ensure fair distribution under Section 27 of the Hindu Marriage Act, particularly when claims of concealed assets or dowry are raised. Subjective estimations without a valuer may result in unjust settlements, delays in resolution, and rising litigation expenses. Thus, a valuer not only reduces bias but also increases judicial trust in the final order.
What steps would the United States use to determine the value of the above-mentioned marital dispute?
- If Ankit’s hospital was acquired during the marriage, Reeta might receive 30-50% equity (equitable states) or 50% outright (community states).
- False criminal cases may be considered “marital misconduct,” influencing alimony but not property divisions.
- Child support would be determined using state calculators (for example, 20-40% of the non-custodial parent’s income).
Comparison: India vs. USA
Factors | India | USA |
Legal | Personal Laws, CPC | State specific (Community property) |
Valuation Standards | Court dependent | USPAP, IRS guidelines |
Business Valuation | DCF, NAV | DCF, Comparable analysis |
Goodwill | Personal Goodwill | Enterprise goodwill |
Experts involvement | CA or registered valuers | Certified appraisers, Forensic Accountants |
Conclusion:
Judicial separation allows the couple to take a break from an ongoing marital dispute, whereas divorce, which comes in several forms, is a legal way to end a marriage. Balancing the financial interests of both parties is the aim of valuation in marital disputes, guaranteeing openness, equity, and legal integrity throughout the divorce procedure.
Disclaimer
The content published on this blog is for informational purposes only. The opinions expressed here are solely those of the respective authors and do not necessarily reflect the views of Fintrac Advisors. No warranties are made regarding this information’s completeness, reliability, or accuracy. Any action taken based on the information presented in this blog is strictly at the reader’s own risk, and we will not be liable for any losses or damages resulting from its use. It is recommended that professional expertise be sought for such matters. External links on this blog may direct users to third-party sites beyond our control. We do not take responsibility for their nature, content, or availability.
